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How the automotive industry will benefit from digitalization

Value creation potential in the billions will transform the industry.

Overview

Although connectivity is nothing new to automotive, business opportunities are growing rapidly. As the automotive ecosystem is opening to powerful non-traditional players, connectivity is truly a disruptive trend. Automakers need to determine their role and identify where they can generate value from this technology and put the pedal to the metal when it comes to deploying new operating models and capabilities. If they don't, they risk being overtaken by tech companies looking to exploit connected cars for their own growth plays.

Yet, as original equipment manufacturers (OEMs) wade more deeply into connectivity, they are facing several challenges. For starters, while consumers want their vehicles to be connected, there is some evidence they won't necessarily be willing to pay extra. Also, they expect their smartphones, tablets, and other devices to work seamlessly within their vehicles.

To deliver superior solutions in an efficient way within this ecosystem, OEMs should focus on vehicle-related functionality bundles related to areas such as assistance, remote access or navigation. At the same time, they need to integrate non-vehicle related services hosted on handheld devices. Earning a chunk of the connected car pie requires OEMs to make significant investments.

Certainly, the potential is available: Accenture believes the total business value of connected car services will reach €100 billion by 2020, and €500 billion by 2025. On a per-vehicle basis, a fully-fledged connected car, assuming heavy usage, could deliver more than €5,000 in additional value over lifetime, in our view.

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